Markets & Finance

European Indexes Gain

February 13, 2007

Earnings powered the indexes Tuesday

From Standard & Poor's European MarketScope

European indexes finished strong Tuesday. Wall Street was in positive territory helped by Alcoa (AA), on bid talk, and a share buyback by 3M (MMM). Oil moved above US$58/bbl after sliding US$2 Monday after the IEA raised its forecast for 2007 world oil demand growth to 1.55 million bpd (+1.8%) from 1.39 million bpd (+1.6%).

UK: UK:The FTSE 100 index closed higher. UK CPI numbers came in lower than expected, showing that inflation in the UK has slowed. The latest figures provided reassurance that the BoE may not hike interest rates in the near term.

Sectorwise, miners, especially the aluminum firms, were in focus after a report in The Times said that BHP Billiton (BHP) (+2.34%) and Rio Tinto (RTP) (+2.35%) had drawn up plans for a US$40 billion takeover of Alcoa, one of the world's largest aluminum groups.

Banking stocks were higher following the inflation data. The real estate sector crumbled after property manager British Land (-3.57%) built up a 12% rise in nine months profit, but unveiled a drop in December NAV to £16.10/sh. In other earnings news, Specialist mortgage lender Bradford & Bingley (-0.32%) said fiscal year underlying pretax profit rose 8% in fiscal 2006, beating analyst estimates.

British Energy (-3.60%) posted nine months adjusted EBITDA of £775 million and said that boiler repairs were on track. Anglo-US fund manager Amvescap's (-2.63%) fiscal year pretax profit rose to US$754.6 million.

France: The CAC 40 index (+0.69%) closed in positive territory. Of local note, Total (TOT)(+0.77%) led the points gainers, lifting the CAC 40 5.23pts, on oil going back over US$58/bbl. Carrefour (+3.85%) was the best percentage performer on news the CEO Luc Vandevelde has bought €10 million of the retailer's stock.

Among those reporting, Bouygues (+2.17%) outperformed after reporting fiscal 2006 sales of €26.408 billion, up 10% year-over-year, against market expectations of €26.169 billion. Conversely, Sanofi Aventis (SNY) (-1.47%) remained in the doldrums, weighing on the CAC 40 some 6.02pts. It posted fiscal 2006 net sales of €28.373 billion (up 4%, but impacted by generics) and now expects a slower rise in R&D spending in 2007.

Valeo (+4.52%) posted 2006 operating profit down to €341 million from €374 million, but gave operating margin guidance of 6% for 2010 and is looking to acquire US stock. In other news, Saint Gobain (+1.31%) has bought six companies in Germany, Holland and the Channel Islands to add to its distribution capacity.

Germany: Germany: The Xetra-Dax index (+0.21%) remained higher and closed firmly in the black. On the corporate news front, the so-called VW (+0.73%) Law broke EU law, a court adviser to the EU's top court said, explaining that it hinders the free movement of capital in the bloc, its shares rose further.

On the earnings front, ThyssenKrupp (-0.19%) dipped again after it raised its revenue and earnings forecasts after reporting record final first quarter results, with quarterly net profit in at €661 million. Fraport (+2.63%) came off earlier highs after January passenger numbers rose 3% at Frankfurt airport to 3.82 million. The freight handled was up 2.6% to 149,221 tons at Europe's third-biggest hub.

Software and consultancy group IDS Scheer (-0.63%) reported a slide in fiscal 2006 operating profit to €29.3 million from €31 million the previous year on sales 11.4% higher year-over-year at €354 million. Construction group Bilfinger (+5.29%) rose higher following a 39% rise in full-year net income to €92 million, ahead of expectations. Financial adviser MLP (+0.52%) saw its fourth quarter net profit top expectations, coming in at €33.1 million, but the turnaround story was not seen as yet complete.

Medtech group Qiagen (-1.91%) posted fourth quarter net profit of US$19.4 million compared to US$16.9 million last time. Metering services group Techem (-0.09%) moved into the black when its fiscal first quarter net profit almost doubled to €6.2 million. Solar World (-1.13%) fell further after beating its own forecast with fiscal year net earnings of €30 million.